Question

Read “Space Age Furniture Company” (below). Respond to the following and include any Materials Requirement Planning (MRP) calculations:

Develop an MRP for Space Age Furniture Company using the information in the case including the production of sub-assemblies in lot sizes of 1,000.

The lot size of 1,000 for sub-assemblies has produced a lumpy demand for part 3079. Suggest ways for improvements over sub-assemblies in lot sizes of 1,000.

Analyze the trade-off between overtime costs and inventory costs.

Calculate a new MRP that improves the base MRP.

Compare and contrast the types of production processing—job shop, batch, repetitive, or continuous—and determine which the primary mode of operation is and why.

Describe ways that management can keep track of job status and location during production.

Recommend any changes that might be beneficial to the company and/or add value for the customer.

Space Age Furniture Company

The Space Age Furniture Company manufactures tables and cabinets to hold microwave ovens and portable televisions.These products are made in various sizes and with various features, but all follow basically the same production andassembly operations. However, two of these products—the Saturn microwave stand and the Gemini TV stand—have a part(no. 3079) that requires machining on a special lathe used only for making that part. At present the machine is run by EdSzewczak, a machinist who also operates other machines in Space Age's shop. Once set up and started, the lathe can runnearly unattended. However, the machinist must be present (even if not actually attending the machine) any time one of themachines, including the lathe, is in operation. At present, Ed works a regular 40-hour week. However, due to the workloadfor producing part 3079, it has been necessary to schedule frequent overtime for him in order to finish the necessary partson time.

Coral Snodgrass, operations manager for Space Age, has just heard from Ed's foremen that Ed is becoming unhappy about somuch overtime. As Coral knows, Ed has been with the company a long time and is an excellent, reliable employee. Skilledmachinists with Ed's experience and employment record are extremely difficult to find. Coral wonders what can be done toalleviate this problem.

Recently, Space Age began using an MRP system that has helped reduce inventories greatly and improve on-time deliveries.In fact, Space Age carries no finished-goods inventory. Instead, everything in the master schedule is being produced forcustomer orders, so all products are shipped almost immediately. Previously Space Age had estimated that it cost $1.25 perweek to store each Gemini and $1.50 per week to store each Saturn that wasn't shipped immediately. The master schedulefor producing these two items for the next six weeks is shown below.

Master Schedule
Week
	1	2	3	4	5	6
Gemini	600	400	700	500	400	600
Saturn	300	400	400	600	300	300

The part in question, 3079, is used in two different subassemblies: no. 435, which is used in the Gemini TV stand, and no.257, which is used in the Saturn microwave stand. One of part 3079 is used in each subassembly, and one of eachsubassembly is used in each of the final products.

Part 3079 may be produced in any quantity since the lathe that makes it is not used for anything else. However, both of thesubassemblies are produced using the same equipment. To minimize change over time, Space Age has decided that thesesubassemblies should be made in minimum quantities of 1,000 at a time, although there is no problem with capacity on theequipment that makes them. In fact, an order for 1,000 of subassembly 435 is due to be received in week 1, as is an orderfor 1,000 of subassembly 257. Lead time for both these subassemblies is one week, and no inventory is expected to be onhand for either part at the beginning of week 1. There is not any on-hand inventory of part 3079, and there are no orders inprocess.

Ed Szewczak earns $22 per hour and gets a 50% premium for any overtime work. Whenever part 3079 is made, there is no setup time, but processing takes 0.03 hour per unit. It costs $0.25 per week to hold any of these parts over from one weekto the next. The cost of holding each subassembly in inventory is $0.75 per unit per week.

Answer 1

In bulk production conditions, as given in the question, batch production is beneficial. The standardisation of batch operation

would result in uniformity in operation, thereby resulting in significant savings. Also, the supervision time and cost is reduced in batch production.

Job costing is preferred, when each order of the customer is unique requiring different input & processess.

Management can keep track of the status job by specifying the benchmarks for each activitiy, which means standardisation of operation.

In that event, the mgt can appraise the current status of the job vis a vis the benchmark and take appropriate decision to bring the concerned job on track.